Commission adopts delegated acts on renewable hydrogen (RFNBO): additionality and correlation rules

On 10 February 2023 the European Commission adopted two delegated acts to the Renewable Energy Directive (RED II) which set out when hydrogen and derived fuels can be recognised as renewable fuels of non-biological origin (RFNBO). The first defines the conditions that the electricity used to produce hydrogen must meet; the second sets the methodology for calculating greenhouse gas emission reductions for RFNBO and recycled carbon fuels. For the biogas industry this is an important distinction: hydrogen from biomass or biogas is not RFNBO and is subject to separate rules on bioenergy.

What is changing

For hydrogen from electrolysis to be recognised as renewable, the electricity must come from new renewable sources (the additionality principle), be generated at the same time as it is consumed (temporal correlation) and in the same market zone or in a connected area (geographical correlation). The Commission provided for a transitional period in which the rules are milder, and a tightening after 2030. The acts also allow hydrogen produced in periods when electricity prices are low or when renewable sources are curtailed, and with a very high share of renewables in a given zone, to be recognised as renewable.

The second act introduces a methodology for calculating life-cycle emissions, taking into account, among other things, electricity, additives and transport. The emission reduction for RFNBO is to be at least 70%.

Significance for the industry in Poland

In Poland renewable hydrogen is gaining importance in energy policy and in industry plans. The biogas industry enters this discussion for three reasons. First, biogas and biomethane can be a feedstock for hydrogen production by reforming, but such hydrogen qualifies as a fuel from biomass, not RFNBO, and is subject to feedstock sustainability and emission saving criteria. Second, hydrogen in the gas grid affects the rules for transmission and the quality of gas, including biomethane. Third, biogas installations can use hydrogen for CO₂ methanation and thereby increase methane production.

For investors the distinction between regulatory packages is important: hydrogen from electrolysis, the delegated act on RFNBO; hydrogen from biomass, RED and national rules on biofuels and bioenergy.

Why these rules are contested

Supporters of strict additionality and correlation rules point out that without them hydrogen from electrolysis could increase demand for energy from fossil fuels. Critics, mainly part of industry and some countries, argue that the requirements will raise costs and delay investment. Compromise transitional periods are meant to soften this problem. For the biogas industry it matters that this discussion does not concern hydrogen from biomass, but the arrangements around RFNBO affect the whole hydrogen and infrastructure market.

What next

Parliament and the Council have a set time to raise an objection. If they do not, the acts will be published and enter into force. The hydrogen industry expects the rules to allow projects to be launched quickly, and critics stress the risk of overly lenient transitional rules.